Market Anomaly

A market anomaly refers to a situation where a financial market behaves in ways that are inconsistent with the efficient market hypothesis (EMH). These anomalies can be observed in stock price movements, asset valuations, or other market behaviors that deviate from what EMH predicts. Common market anomalies include the January effect, where stocks tend to rise more in January, and the value anomaly, where value stocks outperform growth stocks over time.

Example

The January effect is a well-known market anomaly where stock prices often rise in January due to increased investor demand after year-end tax loss selling.